Eli Lilly and partner Incyte have finally secured FDA approval for their rheumatoid arthritis drug Olumiant (baricitinib), but it's not the unalloyed win the companies had hoped for. Only the lower dose was approved, and that version comes with a black-box safety warning. Now, launching into an already competitive field, Olumiant will debut at a less-effective dose and with safety concerns, too.

The FDA's decision came as an unwelcome surprise to Lilly execs, who maintained that the higher dose should hit the market, too—even after an FDA advisory panel backed the lower dose and shunned the higher one. At the time, analysts pressed Eli Lilly management to say how Lilly would respond if the FDA only approved the smaller dose.

On a conference call, Christi Shaw, president of Lilly Bio-Medicines, maintained that the panel discussion showed the need for both baricitinib doses, highlighting the fact that the higher dose proved more effective in trials—a statement that illustrates what Olumiant will be up against as it launches.

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"I think you saw yesterday the reinforcement by everyone with the 4 milligram dose is really needed for patients from an efficacy standpoint," Shaw said, adding, "Our goal is to actually have both doses available and we continue to study both the 2 and the 4 milligrams and other studies that are ongoing," she said.

CEO David Ricks said he was hopeful, too. Lilly is "confident in the benefit-risk profile of both baricitinib 2-mg and 4-mg for the treatment of patients with RA, supported by the clinical data generated to-date, and by the experience in more than 40 countries in which both doses are approved and available," he said. The drugmaker would continue to work with the FDA on the "important application," he added.

In a move to help its drug scoop up share after the nod, Lilly plans to undercut the leading TNF inhibitor—likely AbbVie's pricey Humira—by 60%, the company said on Friday. It'll launch by the end of the quarter. The partners also agreed to conduct a randomized clinical trial to look at long-term safety.

Analysts had expressed worries that a limited approval could hobble the Olumiant launch. Bernstein's Tim Anderson previously wrote that “bears may argue that without the 4-mg dose, the perception and commercial profile of baricitinib is wounded.”

Lilly will soon have a chance to find out. A once-daily tablet, Olumiant comes with a label warning of serious infections, malignancy and thrombosis risks. The JAK inhibitor is approved to treat adults with moderate to severe rheumatoid arthritis who've failed to respond to at least one anti-TNF drug, according to the label posted on the FDA's website.

The approval follows a rough history at the FDA. Last year, Olumiant was among a group of Lilly meds analysts predicted would grow to blockbuster sales, but it hit two FDA delays. The agency first put off its decision by three months, and then, in April 2017, it opted to send it back for more work. In a complete response letter, the agency asked Lilly for additional clinical data to determine the best dose.

Olumiant will face off against Pfizer's Xeljanz in the market, with potential rivals from GlaxoSmithKline and Johnson & Johnson, Sanofi and Regeneron, and Gilead Sciences and Galapagos in the pipeline. Analysts previously predicted the drug can pull in $1.8 billion in sales by 2022, but that was before the CRL and safety concerns.